Boeing and AE Industrial Partners to launch second venture capital fund

A model of Boeing 777X is seen at the Farnborough International Airshow in Farnborough, Britain July 19, 2022. REUTERS/Matthew Childs

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FARNBOROUGH, England, July 20 (Reuters) – Boeing Co (BA.N) said on Wednesday it has agreed to invest $50 million in AEI HorizonX, expanding an established partnership with private equity firm AE Industrial Partners to invest in aerospace technology startups.

The new funding will anchor AEI’s second venture capital fund HorizonX (Fund II), which plans to raise $250 million “to support promising start-ups in the fields of mobility, space, sustainability, digital business applications, networks and security”.

Boeing, which like many aerospace companies had historically used internal venture capital funds to tightly control technology development, launched HorizonX in 2017 as a venture capital arm to invest in start-ups.

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Last year, Boeing spun it off to create a larger outside investment fund managed by AE Industrial Partners, an aerospace-focused private equity firm with $5 billion under management. Read more

Boeing said in a press release that some AEI HorizonX portfolio companies have made progress in zero-carbon aircraft propulsion systems; passenger entertainment; and commercial and defense aircraft safety and cybersecurity.

Marc Allen, Boeing’s chief strategy officer, told Reuters the new fund would invest in technologies such as mobility, sustainability, space and communications: “Anything that goes into new industrial technology to support the ‘aerospace’.

Asked if investors remained supportive of aerospace after stock prices plummeted when travel demand plummeted during the pandemic, Allen said: “The positive disruption that technology is playing in the industrial landscape is clear. “

He added, “You can’t do better than buy when a market is at its lowest. Of course, post-COVID, aerospace is just staring at a big growth chart ahead of it.”

Since 2021, the AEI HorizonX wallet has seen five IPOs and exits. Its portfolio includes 51 global investments in areas such as AI and machine learning.

Among HorizonX’s initial investments was a $20 million stake in Richard Branson’s suborbital tourism venture Virgin Galactic (SPCE.N), which ferried the billionaire British businessman to the far reaches of the space last year.

Boeing and Airbus both foresee strong underlying demand for aircraft, while new threats drive up defense demand. But supply chain issues persist.

Aerospace supply chains “have to become more efficient, more digital, more connected,” Allen said in an interview.

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Reporting by David Shepardson and Tim Hepher; Editing by David Gregorio

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